The current financial stability regime is a “disaster” and the Financial Services Authority should be absorbed into the Bank of England, according to a former leading figure in the City.

Sir Martin Jacomb, who was deputy chairman of Barclays bank and a director of the Bank of England, on Tuesday proposes a new framework for financial supervision. The FSA, he says, should become one of the Bank’s core divisions with the same relationship to the Bank as the monetary policy committee – a body with Bank and external representatives that has the authority to set interest rates.